Nifty, Sensex close flat amid inflation concerns; metal stocks shine, gold and silver surge after duty hike

MUMBAI: The domestic equity markets closed almost flat with minor gains on Wednesday amid cautious investor sentiment, while broader markets outperformed due to buying in mid- and small-cap stocks. The Nifty 50 index closed at 23,412.60 with a gain of 33.05 points, or 0.14 per cent, while the BSE Sensex ended at 74,608.98, up by 49.74 points, or 0.07 per cent.

Market experts said investors remained cautious amid rising global commodity prices, inflation concerns and ongoing geopolitical tensions in the Middle East.

Vinod Nair, Head of Research at Geojit Investments, said, “Domestic benchmark indices closed flat with a cautious undertone, while broader markets outperformed on dip buying and short covering in mid- and small-cap stocks. A sharp increase in import tariffs on precious metals was sentimentally positive for INR. Metal stocks outperformed due to a supply squeeze. Inflation inched higher domestically but remained below expectations, offering some near-term comfort”.

However, he cautioned that prolonged tensions in the Middle East and elevated commodity prices could limit the RBI’s policy flexibility if inflationary pressures continue. According to him, sticky inflation in the US is also supporting the “higher-for-longer” interest rate narrative, strengthening the US dollar and weighing on global risk assets.

Nair further added that AI-driven themes are witnessing strong global inflows due to better earnings visibility and long-term structural growth potential. He said markets will now closely watch the upcoming US-China summit for further clarity on trade and geopolitical developments.

Among sectoral indices, Nifty Auto declined 0.97 per cent, while Nifty IT fell 1.13 per cent. Nifty Media slipped 0.04 per cent, Nifty PSU Bank declined 0.09 per cent and Nifty Realty fell 0.19 per cent.  On the gaining side, Nifty FMCG rose 0.30 per cent, Nifty Metal surged 3.18 per cent, and Nifty Consumer Durable gained 1.67 per cent.

Meanwhile, Brent crude prices continued to remain elevated and were trading at USD 108 per barrel. Precious metals also witnessed a sharp rise after the customs duty hike. Gold prices surged 6 per cent to Rs 1,62,482 per 10 grams for 24 karat gold at the time of filing this report. Silver prices also remained high, rising 6.53 per cent to Rs 2,97,192 per kg.

Anindya Banerjee, Head of Commodity and Currency Research at Kotak Securities, said the hike in customs duty on gold and silver from 6 per cent to 15 per cent was a measured policy response. He said the rise in domestic prices was mainly a mechanical re-pricing to a new import parity and not a fundamental rally, adding that the higher duty has now become a fixed cost embedded in prices.

Asian markets closed mixed on Wednesday. Japan’s Nikkei 225 index ended higher by 0.07 per cent at 62,742 levels, while Singapore’s Straits Times gained 1.16 per cent to close at 5,003 levels. Hong Kong’s Hang Seng Index rose 0.12 per cent to close at 26,379 levels, while South Korea’s KOSPI index gained 2.56 per cent to settle at 7,844 levels. (ANI)